The two companies will set up manufacturing lines in Ishikawa Prefecture in the fall of 2009, aiming to produce 1 million "high-quality" 2.5-inch organic EL displays, according to a report in Monday's Nihon Keizai Shimbun.

This is a first for domestic Japanese production of EL displays on this scale, the report said. The displays are targeted at cell phones and other small devices.

EL displays are based on organic light-emitting diode (OLED) technology that uses electroluminescent organic materials. The display panels are extremely thin because they don't need backlights. The electroluminescent layer contains a polymer substance that directly converts electricity to light.

The companies are chasing Samsung, which has already begun mass production. The goal is to bring costs down and stabilize quality. This then can be applied to the manufacture of larger-size TV panels.

In December, Toshiba said it would postpone production of larger (up to 30-inch) organic EL displays and would focus initially on mass production of smaller displays.